While many businesses can heat up during the summer, a lot of businesses experience a major slow-down. With the kids out of school, people are often busy taking vacations or participating in warmer weather activities. If your business goes through seasonal doldrums, why not take advantage of the downtime to review your business budget? You can review how your year has gone so far and plan for what you want the rest of your year to look like.
Review Your Business Budget
Grace Walker, The Payroll Department’s bookkeeping/accounting expert, recommends that businesses create an annual budget at the beginning of each year. As Alan Lakein, a well-known author on time management, says, “Failing to plan is planning to fail.” And Grace Walker believes that. You need to create a business plan to forecast your revenues and expenses for the upcoming fiscal year. Then, it is equally important to review your business budget during the year to see if you’re performing as you expected. Because if you don’t plan your budget ahead, how can you gauge if you’re performing well or not? You’re just setting yourself up to fail without a business budget.
During your review, you should look at your actual income for each month and compare it with your budgeted income. Also, you should review and compare your actual expenditures against your budget. This will help you predict your future business costs with greater reliability.
What You Should Do if Performance Meets or Exceeds Your Expectations
If your business is performing as you expected or even better, you may want to celebrate. But that doesn’t mean you should rest on your laurels. You should review your numbers to understand why you performed well. Some questions to ask yourself include:
- Did you sell more products or services than you expected?
- Were your expenses lower than predicted?
- Were your costs lower than anticipated?
By understanding why, you performed at or beyond your expectations, you can continue doing more of what works for your business – and, hopefully, make the rest of your year even better.
What You Should Do if Performance Is Lower than Your Expectations
If your business didn’t perform as well as you thought it would, it’s imperative to review your budget and determine why. Ask yourself these questions:
- Was I too optimistic when I created my business budget?
- Did I underestimate how much it costs to run my business?
- Did something happen that caused my sales to suffer?
- Am I pricing my products or services correctly?
- Were my expenses higher than I expected?
- What changes can I implement to bring in more revenue?
By asking yourself these and other questions, you can prepare more effectively for the rest of the year – and plan better for any additional unforeseen expenses.
Make a Business Budget if You Don’t Have One! A Bookkeeper Can Help You
If you don’t have a business budget, use your downtime to create one for the rest of the year. A budget can help you make business goals, gauge how well your business is doing, determine what’s coming in and going out money-wise, make any necessary changes in how you’re running your business, and, ultimately, help you make more money.
If you’ve never developed or reviewed a business budget, a bookkeeper like Grace Walker can help. She can walk you through the process of creating a budget by helping you to forecast your revenue, expenses, and profit. Grace is experienced with helping Hoosier companies like yours to develop a budget that you can use as a valuable tool to help you maintain or grow your business. Additionally, if you’re trying to tackle your business bookkeeping on your own, Grace can help you with all your bookkeeping needs throughout the year to keep your business on track. To learn more about outsourcing your bookkeeping tasks, contact Teresa Ray at 317-852-2568.
The Payroll Department wants to help you make your business be more successful!
– Ariane of The Payroll Department Blog Team